![]() ![]() But "if policymakers aren’t careful, these long-term commitments can place them in a more vulnerable fiscal position when the economy inevitably turns.” “Tax cuts or new spending initiatives aren’t inherently bad or uncommon during good budgetary times," Theal said. “This extraordinary chapter in state finances appears to be coming to an end,” said Justin Theal, an officer with Pew's State Fiscal Policy Project. But those federal payments are winding down, inflation remains persistently high and new challenges in the banking sector have raised questions about the overall economy. Those surplus-induced tax breaks were enabled by stronger than expected state tax collections and an influx of federal pandemic aid both directly to states and to businesses and individuals that, in turn, injected more spending into the economy. Two-thirds of states approved some sort of tax relief last year, according to an analysis by The Associated Press. ![]() Nationwide, states' total financial balances reached a record $343 billion at the end of their 2022 fiscal years - up 42% from the previous year, according to a recent report by The Pew Charitable Trusts. The tax cut package is expected to return more than two-thirds of the state's record $1.1 billion surplus to taxpayers, as opposed to spending it on state programs. Jim Justice signed a measure passed by the GOP-led Legislature that reduces the income tax rate while also enlarging an income tax credit to offset personal property taxes paid on vehicles. Gretchen Whitmer signed a bill passed by the Democratic-led Legislature that provides tax relief to retirees and to lower-income families.Īnd in West Virginia, Republican Gov. Greg Gianforte last week signed a $1 billion package of bills passed by the GOP-led Legislature that will provide both income and property tax rebates, reduce the top income tax rate and increase income tax credits for lower-income working families. ![]() Kristi Noem, a Republican, signed legislation Tuesday that will lower the state’s sales tax for a four-year period, though she had originally wanted the GOP-led Legislature to eliminate the sales tax on groceries. In some states, those tax breaks have been pushed by Republicans, but in others by Democrats. But legislatures and governors in several states already have given final approval to tax cuts and rebates in the first few months of this year. The Missouri legislation still has a ways to go - it needs a second House approval before it can move to the Senate and then to the governor. ![]() Deb Lavender asked rhetorically before her Republican colleagues endorsed the tax cut on a 109-45 party-line vote. “Wouldn’t it be a good idea for us to all just pause for a year?” Democratic state Rep. states last year and have continued into 2023 - even as some warn that it might be wise for states to hold on to record large surpluses amid economic uncertainty. The Missouri legislation is the latest in a series of aggressive tax reductions that swept across U.S. Just six months after passing what was billed as the largest tax cut in Missouri history, the Republican-led state House voted Tuesday for an even bigger income tax cut that could return over $1 billion annually to individuals, corporations and retirees. ![]()
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